Malleable Cast Iron Pipe Fittings from Brazil, Japan, Korea, … · 2014-05-27 · Awaji Sangyo...

Malleable Cast Iron Pipe Fittings From Brazil, Japan, Korea, Taiwan,

and Thailand

Investigations Nos. 731 -TA-278-280 (Review) and 731 -TA-347-348 (Review)

Publication 3274 February 2000

Washington, DC 20436

COMMISSIONERS

Lynn M. Bragg, Chairman Marcia E. Miller, Vice Chairman

Jennifer A. Hillman Stephen Koplan Thelma J. Askey

Deanna Tanner Okun

Robert A. Rogowsky Director of Operations

Stafs assigned: Jim McClure, Investigator

Gerald Houck, Industry Analyst Craig Thomsen, Economist David Boyland, Accountant

Marc Bernstein, Attorney Rozann Stayden, Attorney

Robert Carpenter, Supervisory Investigator

Address all communications to Secretary to the Commission

United States International Trade Commission Washington, DC 20436

US. International Trade Commission Washington, DC 20436

Malleable Cast Iron Pipe Fittings From Brazil, Japan, Korea, Taiwan,

and Thailand

Publication 3274 February 2000

C O N T E N T S

Page

Determinations .................................................................. 1 Views of the Commission ......................................................... 3 Separate views of Vice Chairman Marcia E . Miller and Commissioner Jennifer A . Hillman ..... 11 Separate and dissenting views of Commissioner Stephen Koplan .......................... 25 Separate and dissenting views of Chairman Lynn M . Bragg .............................. 39 Separate and dissenting views of Commissioner Thelma J . Askey 45 Part I: Introduction and overview ................................................ 1-1

Background .................................................................. 1-1 The original investigations ................................................... I- 1

Statutory criteria .............................................................. 1-6

Nature and extent of sales at LTFV ............................................... 1-8 Commerce’s final results of expedited sunset reviews on Japan. Korea. and Taiwan ...... 1-8 Commerce’s final results of full sunset reviews on Brazil and Thailand . . . . . . . . . . . . . . . . 1-8 Administrative reviews on subject countries ..................................... 1-8

Brazil ................................................................. 1-8 Japan .................................................................. 1-9 Korea ................................................................. 1-9 Taiwan ................................................................ 1-9 Thailand ............................................................... 1-9

Antidumping duties collected ................................................. 1-10 Theproduct .................................................................. 1-11

The subject product ......................................................... 1-11 The domestic like product .................................................... 1-11 Physical characteristics and uses ............................................... 1-11

Interchangeability and customer and producer perceptions .......................... I- 12 Channels of distribution ..................................................... I- 12

U.S. market participants ........................................................ I- 13 U.S. producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I- 13 U.S.importers ............................................................. 1-13

Apparent U.S. consumption and market shares ...................................... 1-14 Part 11: Conditions of competition in the U.S. market ................................ 11-1

U.S. market segmentskhannels of distribution ...................................... 11-1 U.S. market leadership ......................................................... 11-2 Supply and demand considerations ............................................... 11-3

Domestic production ..................................................... 11-3

Alternative markets .................................................... 11-4 Inventory levels ....................................................... 11-4 Production alternatives ................................................. 11-4

.........................

Summarydata ................................................................ 1-7

Manufacturingprocess ...................................................... 1-12

U.S. supply ............................................................... 11-3

Industrycapacity ...................................................... 11-3

C 0 N T E N T S-Continued

Page Part 11: Conditions of competition in the U.S. market.. Continued

Supply and demand considerations-continued U . S . suppl yxontinued

Subjectimports .......................................................... 11-4 Industry capacity ...................................................... 11-5 Alternative markets .................................................... 11-6 Inventory levels ....................................................... 11-6 Production alternatives ................................................. 11-7

U.S.demand .............................................................. 11-7 Demand characteristics ................................................... 11-7 Substituteproducts ....................................................... 11-8 Costshare .............................................................. 11-8

Substitutability issues .......................................................... 11-8 11-9 11-9

11-1 0 11-10 11-10

11- 1 1 11- 1 1 11- 1 1

Modelresults ................................................................ 11-12 111-1 111-1 111-1

111-2 111-2

Factors affecting purchasing decisions .......................................... Comparisons of domestic products and subject imports ............................. Comparisons of domestic products and nonsubject imports .......................... Comparisons of subject imports and nonsubject imports ............................ Comparisons of subject products from the subject countries ......................... U.S. supply elasticity ........................................................ U.S. demand elasticity ....................................................... Substitution elasticity .......................................................

Part 111: U.S. producers’ trade, employment, and financial data ....................... U.S. producers’ capacity. production. and capacity utilization .......................... U.S. producers’ domestic shipments. company transfers. and export shipments U.S. producers’ inventories ..................................................... 111-1 U.S. producers’ employment. wages. and productivity ................................ Financial condition of the U.S. industry ............................................

Background ............................................................... 111-2 Operations on MCIPF ....................................................... 111-2

Capital and investment ...................................................... 111-5 Part IV: U.S. imports and the foreign industries .....................................

U.S. imports ................................................................. IV- 1 U.S. importers’ inventories ...................................................... 1v-4 The industry in Brazil .......................................................... The industry in Japan .......................................................... The industry in Korea ..........................................................

The industry in Thailand ........................................................ Antidumping duties in other countries .............................................

Elasticity estimates ............................................................ 11-1 1

............

Capital expenditures. R&D expenses. and investment in productive facilities ........... 111-4 1v-1

1v-4 1v-5 1v-5

TheindustryinTaiwan ......................................................... 1v-6 1v-6 1v-6

.. 11


Page

Part V: Pricing and related information ........................................... V-1 Factors affecting prices ......................................................... V-1

Raw material costs .......................................................... V-1 V-1

U.S. inland transportation costs ................................................ V- 1 Tariffrate ................................................................. V-1 Exchange rates ............................................................. V- 1

Pricingpractices .............................................................. V-4 Pricingmethods ............................................................ V-4 Sales terms and discounts .................................................... V-5

Pricedata ................................................................... V-5 Pricetrends ............................................................... V-10 Pricecomparisons .......................................................... V-10

Transportation costs to the U S . market .........................................

Appendixes

A . Federal Register notices and adequacy statement ................................. A- 1 B . Listofwitnesses ........................................................... B-1 C . Summarydata ............................................................. C-1 D . Responses of producers. importers. purchasers. and foreign producers concerning the

significance of the existing antidumping duty orders and the likely effects of revocation .............................................................. D-1

E . COMPAS presentation ...................................................... E-1

Figures

V- 1 . Exchange rates: Indices of the nominal and real exchange rates between the Brazilian currency. Japanese yen. Korean won. Taiwanese dollar. and Thai baht. and the U.S. dollar. by quarters. Jan . 1986-June 1999 ...................................... V-2 and by quarters. Jan . 1997-June 1999 ........................................ V- 10

V-2 . Weighted-average net delivered prices (per pound) of products 1.4. by sources

Tables

1.1 . MCIPF: Background and schedule of reviews ................................... 1-2 1.2 . MCIPF: Summary data presenting selected items from the original and current

investigations on Brazil. Japan. Korea. Taiwan. and Thailand. 1983.86. 1997.98. Jan.-June 1998. and Jan.-June 1999 .......................................... 1-3

1.3 . MCIPF: Actual duties collected and imports from subject countries. fiscal years 1994-98 . 1-10 1.4 . MCIPF: U.S. shipments of domestic product. U.S. imports. and apparent U.S.

consumption. 1997.98. Jan.-June 1998. and Jan.-June 1999 ....................... I- 15 1.5 . MCIPF: U.S. market shares. 1997.98. JamJune 1998. and Jan.-June 1999 . . . . . . . . . . . . 1-16

... 111


Page

Tableecontinued

111- 1.

111-2.

111-3.

111-4.

111-5.

111-6.

111-7.

111-8.

111-9.

IV- 1. IV-2.

IV-3. IV-4. v-1.

v-2.

v-3.

v-4.

v-5.

c-1.

MCIPF: U.S. producers’ capacity, production, and capacity utilization, 1997-98,

MCIPF: U.S. producers’ shipments, by type, 1997-98, Jan.-June 1998, and

MCIPF: U.S. producers’ end-of-period inventories, 1997-98, Jan.-June 1998, and

Average number of production and related workers producing MCIPF, hours worked,

Jan.-June 1998, and Jan.-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111-1

Jan.-June1999 .......................................................... 111-1

Jan.-June1999 .......................................................... 111-1

wages paid to such employees, and hourly wages, productivity, and unit labor costs, 1997-98, Jan.-June 1998, and Jan.-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Results of operations of US. producers in the production of MCIPF, fiscal years 1997-98, Jan.-June 1998, and Jan.-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Results of operations (per short ton) of U.S. producers in the production of MCIPF, fiscal years 1997-98, Jan.-June 1998, and Jan.-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . .

Results of operations of U.S. producers in the production of MCIPF, by firm, fiscal years 1997-98, Jan.-June 1998, and Jan.-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . .

Variance analysis for MCIPF operations of U.S. producers, fiscal years 1997-98, Jan.-June 1998, and Jan.-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Value of assets, capital expenditures, and R&D expenses of US. producers of MCIPF, fiscal years 1997-98, Jan.-June 1998, and Jan.-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . .

MCIPF: U.S. imports, by sources, 1997-98, Jan.-June 1998, and Jan.-June 1999 . . . . . . . . MCIPF: US. importers’ end-of period inventories of imports, 1997-98, Jan.-June 1998,

and Jan.-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MCIPF: Data for the Brazilian industry, 1997-98, Jan.-June 1998, and Jan.-June 1999 . . . MCIPF: Data for the Thai industry, 1997-98, Jan.-June 1998, and Jan.-June 1999 . . . . . . . MCIPF: Weighted-average delivered prices and quantities reported by the domestic

producers and importers of product 1 from Thailand, and margins of underselling, by quarters, Jan. 1997-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MCIPF: Weighted-average delivered prices and quantities reported by the domestic producers and importers of product 2 from Thailand, and margins of underselling, by quarters, Jan. 1997-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MCIPF: Weighted-average delivered prices and quantities reported by the domestic producers and importers of product 3 fiom Thailand, and margins of underselling, by quarters, Jan. 1997-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MCIPF: Weighted-average delivered prices and quantities reported by the domestic producers and importers of product 4 from Thailand, and margins of underselling, by quarters, Jan. 1997-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MCIPF: Weighted-average delivered prices and quantities of imports from Thailand reported by * * *, by quarters, Jan. 1997-Dec. 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MCIPF: Summary data concerning the US. market, 1997-98, Jan.-June 1998, and Jan.-June 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

111-2

111-3

111-3

111-4

111-4

111-4 IV-2

IV-4 IV-5 IV-6

V-6

V-7

V-8

V-9

V- 10

C-3

iv

GLOSSARY OF ABBREVIATIONS (In alphabetical order)

Abbreviation Name/agency/thrase

ANSI .............................................. ASME ............................................. AwajiSangyo ........................................

*** ................................................ *** ................................................

BIS ................................................ *** ................................................ BSP ............................................... *** ................................................ CIPFC ............................................. C.i.f. ............................................... COGS .............................................. Commerce .......................................... CommissionAJSITC ................................... CNIF .............................................. DeHo .............................................. *** ................................................ FR ................................................. Flagg .............................................. F.0.b. .............................................. Grinnell ............................................ *** ................................................ HTS ............................................... Higashio ............................................ Hitachi ............................................. Jefferson Union ......................................

LTFV .............................................. Matco-Norca ........................................ MCIPF ............................................. *** ................................................ Mijin ............................................... *** ................................................ Nakanishi ........................................... Nippon Kokan ....................................... NPS ............................................... NPT ............................................... Psi ................................................. PRWs .............................................. *** ................................................ R&D ...............................................

KwangYu ..........................................

Riken ..............................................

American National Standards Institute American Society of Mechanical Engineers

Awaji Sangyo K.K. *** ***

BIS Pipe Fittings Industry Co., Ltd.

British Standard for Pipe Fittings

Cast Iron Pipe Fittings Committee Cost-insurance- freight

Cost of goods sold U.S. Department of Commerce

U.S. International Trade Commission Customs Net Import File

De Ho Metal Industrial Co., Ltd.

Federal Register Stanley G. Flagg & Co.

Free on board Grinnell Corp.

Harmonized Tariff Schedule Higashio Pipe Fittings Mfg. Co., Ltd.

Hitachi Metals, Ltd. Jefferson Union Co., Ltd.

Kwang Yu Foundry Industrial Co., Ltd. Less than fair value Matco-Norca, Inc.

Malleable cast iron pipe fittings

Mijin Metal Industrial Co., Ltd.

Nakanishi K.K. Co., Ltd. Nippon Kokan Pipe Fittings Mfg. Co.

Nominal Pipe Size National Pipe Thread Standard

Pounds per square inch Production and related workers

Research and development Riken K.K. Co., Ltd.

***

***

***

***

***

***

***

V

GLOSSARY OF ABBREVIATIONS-Continued (In alphabetical order)

Abbreviation Name/agencv/da-ase

SG&A ............................................. SanYang ........................................... Sekisui Chemical ..................................... ShinHan ............................................ Siam ............................................... *** ................................................ Stockham ........................................... *** ................................................ Supply Sales ......................................... TaiYang ............................................ Teikoku ............................................ The Act ............................................. TMIS .............................................. TR ................................................ Tupy ............................................... U-Brand ............................................ Ward ............................................... Yodoshi ............................................ Young Shieng ........................................

Selling, general, and administrative San Yang Metal Industrial Co.

Sekisui Chemical Ind. Shin Han Cast Iron Co., Ltd.

Siam Fittings Co., Ltd.

Stockham Valves & Fittings Co.

Supply Sales Co. Tai Yang Metal Industrial Co., Ltd.

Teikoku K.K. Co., Ltd. Tariff Act of 1930

Thai Malleable Iron & Steel Co., Ltd. Transcript of the hearing

Industria de Fundicao Tupy, S.A. U-Brand Corp.

Ward Manufacturing Co. Yodoshi Malleable Co., Ltd.

Young Shieng Mfg. Co., Ltd.

***

***

Note.-Information that would reveal confidential operations of individual concerns may not be published and therefore has been deleted from this report. Such deletions are indicated by asterisks.

vi

UNITED STATES INTERNATIONAL TRADE COMMISSION

INVESTIGATIONS NOS. 73 1 -TA-278-280 (REVIEW) AND 73 1-TA-347-348 (REVIEW)

MALLEABLE CAST IRON PIPE FITTINGS FROM BRAZIL, JAPAN, KOREA, TAIWAN, AND THAILAND’

DETERMINATIONS

On the basis of the record2 developed in the subject five-year reviews, the United States International Trade Commission determines, pursuant to section 75 l(c) of the Tariff Act of 1930 (19 U.S.C. 0 1675(c)) (the Act), that revocation of the antidumping duty orders on malleable cast iron pipe fittings from Brazil, Taiwan, and Thailand would not be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time.’ The Commission further determines that revocation of the antidumping duty orders on malleable cast iron pipe fittings from Japan and Korea would be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time:

BACKGROUND

The Commission instituted these reviews on January 4,1999 (64 F.R. 369) and determined on April 8, 1999, that it would conduct full reviews (64 F.R. 19196, April 19, 1999). Notice of the scheduling of the Commission’s reviews and of a public hearing to be held in connection therewith was given by posting copies of the notice in the Office of the Secretary, U.S. International Trade Commission, Washington, DC, and by publishing the notice in the Federal Register on June 16, 1999 (64 F.R. 32255). The hearing was held in Washington, DC, on December 2,1999, and all persons who requested the opportunity were permitted to appear in person or by counsel.

’ The investigation numbers are as follows: Brazil is 731-TA-278 (Review), Japan is 731-TA-347 (Review), Korea is 731-TA-279 (Review), Taiwan is 731-TA-280 (Review), and Thailand is 73 1-TA-348 (Review).

The record is defined in sec. 207.2(f) of the Commission’s Rules of Practice and Procedure (19 CFR 0 207.2(f)). Chairman Lynn M. Bragg dissenting with respect to Brazil and Taiwan, Commissioner Stephen Koplan

Commissioner Thelma J. Askey dissenting and Commissioner Deanna Tanner Okun not participating. dissenting with respect to Taiwan, and Commissioner Deanna Tanner Okun not participating.

VIEWS OF THE COMMISSION

Based on the record in these five-year reviews,’ we determine under section 75 l(c) of the Tariff Act of 1930, as amended (“the Act”), that revocation of the antidumping duty orders covering malleable cast iron pipe fittings (“MCIPF”) from Brazil, Taiwan, and Thailand would not be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time and that revocation of the antidumping duty orders concerning MCIPF from Japan and Korea would be likely to lead to continuation or recurrence of material injury to an industry within the United States within a reasonably foreseeable time.2

I. BACKGROUND

In May 1986, the Commission determined that an industry in the United States was being materially injured by reason of less than fair value (LTFV) imports of MCIPF from Brazil, Korea, and T a i ~ a n . ~ The Department of Commerce issued antidumping duty orders with respect to MCIPF from those three countries that same month? In July 1987, the Commission determined that an industry in the United States was being materially injured by reason of LTFV imports of MCIPF from Japan,’ and in August 1987, the Commission determined that an industry in the United States was being materially

’ The record is defmed in Sec. 207.2(f) of the Commission’s Rules of Practice and Procedure (19 C.F.R. §207.2(f)).

Chairman Bragg determines that revocation of the antidumping duty order covering MCIPF from Thailand would not be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time and that revocation of the antidumping duty orders concerning MCIPF from Brazil, Japan, Taiwan, and Korea would be likely to lead to continuation or recurrence of material injury to an industry within the United States within a reasonably foreseeable time. See her Separate Views.

orders covering MCIPF from Brazil, Taiwan, and Thailand would not be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time and that revocation of the antidumping duty orders concerning MCIPF from Japan and Korea would be likely to lead to continuation or recurrence of material injury to an industry within the United States within a reasonably foreseeable time. See their Separate Views.

Commissioner Koplan determines that revocation of the antidumping duty orders covering MCIPF from Brazil and Thailand would not be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time but that revocation of the antidumping duty orders concerning MCIPF from Japan, Korea, and Taiwan would be likely to lead to continuation or recurrence of material injury to an industry within the United States within a reasonably foreseeable time. See his Separate Views.

Commissioner Askey determines that revocation of the antidumping duty orders covering MCIPF from Brazil, Japan, Korea, Taiwan, and Thailand would not be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time. See her Separate Views.

All participating Commissioners join this opinion concerning background of the reviews, domestic like product, domestic industry, the legal standard applicable to five-year reviews, and conditions of competition.

Commissioner Okun did not participate in these determinations.

Vice Chairman Miller and Commissioner Hillman determine that revocation of the antidumping duty

Certain Cast-Iron Pipe Fittings from Brazil. the Republic of Korea, and Taiwan, Inv. Nos. 73 1-TA-278-280

51 Fed. Reg. 18640 (May 21,1986) (Brazil); 51 Fed. Reg. 18917 (May 23,1986) (Korea and Taiwan). Certain Malleable Cast-Iron Pipe Fittings from Japan, Inv. No. 731-TA-347 (Final), USITC Pub. 1987 (June

(Final), USITC Pub. 1845 (May 1986) (“Original BraziVKoredTaiwan Determination”).

1987) (“Original Japan Determination”).

injured by reason of LTFV imports of MCIPF from Thailand.6 Commerce issued antidumping duty orders with respect to MCIPF from Japan and Thailand on July 6, 1987 and August 20, 1987, re~pectively.~ On January 4, 1999, the Commission instituted five-year reviews on the antidumping duty orders on MCIPF from Brazil, Japan, Korea, Thailand, and Taiwan.’

In five-year reviews, the Commission initially determines whether to conduct a full review (which would generally include a public hearing, the issuance of questionnaires, and other procedures) or an expedited review, as follows. First, the Commission determines whether individual responses to the notice of institution are adequate. Second, based on those responses deemed individually adequate, the Commission determines whether the collective responses submitted by two groups of interested parties -- domestic interested parties (producers, unions, trade associations, or worker groups) and respondent interested parties (importers, exporters, foreign producers, trade associations, or subject country governments) -- demonstrate a sufficient willingness among each group to participate and provide information requested in a full re vie^.^ If the Commission finds the responses from both groups of interested parties to be adequate, or if other circumstances warrant, it will determine to conduct a full review.

In these reviews, the Commission received responses to the notice of institution from: (1) the Cast Iron Pipe Fittings Committee (“CIPFC”), and its members Grinnell Corp. (now Supply Sales Co.) and Ward Manufacturing, Inc. (“Ward”), domestic producers of MCIPF; (2) Industria de Fundicao Tupy S.A. (“Tupy”), a producer and exporter of MCIPF from Brazil; and (3) Siam Fittings Co., Thai Malleable Iron and Steel Co., and BIS Pipe Fittings Industry Co. (collectively “Thai Respondents”), producers and exporters of MCIPF from Thailand. No response to the notice of institution was filed by any producers, importers, or exporters of subject merchandise from Japan, Korea, or Taiwan.

On April 8, 1999, the Commission determined that all individual interested party responses to its notice of institution were adequate, that the domestic interested party group response was adequate, and that the respondent interested party group response was adequate for the investigations concerning Brazil and Thailand and inadequate for the investigations concerning Japan, Korea, and Taiwan.” The Commission decided to conduct full five-year reviews for all five reviews in the group.”

of CIPFC, Thai Respondents, and Tupy appeared. CIPFC filed briefs in support of continuation of the antidumping duty orders under review.I2 Thai Respondents filed briefs in support of revocation of the antidumping duty order on MCIPF from Thailand, and Tupy filed briefs in support of revocation of the antidumping duty order on MCIPF from Brazil.

On December 2, 1999, the Commission held a hearing in these reviews, at which representatives

Certain Malleable Cast-Iron Pipe Fittings from Thailand, Inv. No. 73 1-TA-348 (Final), USITC Pub. 2004 (Aug.

52 Fed. Reg. 25281 (July 6, 1987) (Japan); 52 Fed. Reg. 31440 (Aug. 20, 1987) (Thailand).

See 19 C.F.R. $207.62(a).

See Malleable Cast Iron Pipe Fittings from Brazil, Japan, Korea, Taiwan. and Thailand, Explanation of

1987) (“Original Thailand Determination”).

* 64 Fed. Reg. 369 (Jan. 4,1999).

Io See 64 Fed. Reg. 19196 (Apr. 19,1999).

Commission Determinations of Adequacy (April 1999). The Commission decided to conduct full reviews concerning Japan, Korea, and Taiwan, notwithstanding the inadequate respondent interested party response in these reviews, to promote administrative efficiency in light of its decision to conduct full reviews concerning Brazil and Thailand. Commissioner Crawford dissented from the decision to conduct full reviews concerning Japan, Korea, and Taiwan. Id.

under 19 C.F.R. 0 207.68(b). Pursuant to that regulation and 19 U.S.C. $ 1677m(g), we have disregarded that information.

Portions of the fmal comments submitted by CIPFC contained new factual information, which is not permitted

4

11. DOMESTIC LIKE PRODUCT AND INDUSTRY

A. Domestic Like Product

In making its determination under section 75 1 (c), the Commission defines the “domestic like product” and the “indu~try.”’~ The Act defines “domestic like product” as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this ~ubtitle.”’~ Commerce described the merchandise subject to the antidumping duty orders under review identically in each of its final five-year review determinations. In every instance, . Commerce defined the subject merchandise as “shipments of certain malleable cast iron pipe fittings, other than groo~ed.”’~ MCIPF are used to join pipes in piping systems. Because malleable iron is somewhat stronger and less brittle than gray iron, MCIPF are used where shock and vibration resistance is required and where fittings are subject to rapid temperature changes. MCIPF are principally used in gas lines, piping systems of oil refineries, and building gas and water systems.16

In each of the original investigations, the Commission defined the domestic like product as all MCIPF other than grooved.” In these reviews, CIPFC argued that the Commission should define the domestic like product in these five-year reviews in the same manner as it did in the original investigations.” Tupy and the Thai Respondents did not address the issue.

The record indicates that there have been no significant changes in the characteristics and uses of MCIPF since the time of the original determinations.” Indeed, at the hearing a domestic industry witness stated that the production process used to manufacture MCIPF has not changed since he began working in the industry in 1962.*O

No party has argued for a different like product definition in these reviews, and there is no information that indicates a need to revisit the Commission’s original determinations of the domestic like product. We therefore adopt the same domestic like product definition in the instant reviews that we did in the original determinations. Consequently, we define the domestic like product to be MCIPF other than grooved.

l 3 19 U.S.C. 0 1677(4)(A). l 4 19 U.S.C. 0 1677(10). SeeNimon Steel Corn. v. United States, 19 CIT 450,455 (1995); Timken Co. v. United

States, 913 F. Supp. 580,584 (Ct. Int’l Trade 1996); Torrington Co. v. United States, 747 F. Supp. 744,748-49 (Ct. Int’l Trade 1990), uf’, 938 F.2d 1278 (Fed. Cir. 1991). See also S. Rep. No. 96-249 at 90-91 (1979).

l 5 64 Fed. Reg. 66884 (Nov. 30, 1999) (Thailand); 64 Fed. Reg. 66886 (Nov. 30, 1999) (Brazil); 64 Fed. Reg. 42665 (Aug. 5, 1999) (Japan, Korea, and Taiwan). Commerce additionally stated that in 1989 it “clarified that union heads, tails, and nuts fell within the scope of the antidumping duty order on malleable cast iron pipe fittings from South Korea.” 64 Fed. Reg. at 42665.

Confidential Report (“CR”) at 1-13, Public Report (“PR) at 1-1 1. l7 Original BraziVKorea/Taiwan Determination, USITC Pub. 1845 at 4; Original JaDan Determination, USITC

Pub. 1987 at 4-5; Original Thailand Determination, USITC Pub. 2004 at 4-5. In the JapadThailand investigations, the Commission rejected arguments that the domestic like product should be defined to include grooved and/or nonmalleable pipe fittings as well as MCIPF. Original Japan Determination, USITC Pub. 1987 at 5 n.lO; see OriPinal Thailand Determination, USITC Pub. 2004 at 4-5.

lS CIPFC Prehearing Brief at 5-6. l9 See generally CR at 1-13-15, PR at 1-1 1-12. *O Tr. at 21 (Chartrau).

5

B. Domestic Industry

Section 77 1 (4)(A) of the Act defines the relevant industry as the “domestic producers as a [wlhole of a domestic like product, or those producers whose collective output of a domestic like product constitutes a major proportion of the total domestic production of the product.”21 In these five-year reviews, we determine that the domestic industry consists of all producers of MCIPF other than grooved.22

111. LEGAL STANDARD AND CONDITIONS OF COMPETITION

A. Legal Standard

In a five-year review conducted under section 751(c) of the Act, Commerce will revoke an antidumping duty order unless: (1) it makes a determination that dumping is likely to continue or recur, and (2) the Commission makes a determination that revocation of the order “would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.”23 The Uruguay Round Agreements Act (“UMA”) Statement of Administrative Action (‘‘SM’) states that “under the likelihood standard, the Commission will engage in a counterfactual analysis; it must decide the likely impact in the reasonably foreseeable future of an important change in the status quo -- the revocation [of the finding] . . . and the elimination of its restraining effects on volumes and prices of imports.”24 Thus, the likelihood standard is prospective in nature.25 The statute states that “the Commission shall consider that the effects of revocation . . . may not be imminent, but may manifest themselves only over a longer period of time.”26 According to the SAA, a “‘reasonably foreseeable time’ will vary from case-to-case,

21 19 U.S.C. 0 1677(4)(A). 22 There are currently three such producers: Supply Sales, Ward, and Jefferson Union Co. CR at 1-1 6 & n. 17, PR

at 1-13. Ward’s stock is currently owned by Hitachi Metals, Ltd., which produces MCIPF in Japan. At the time of the original Japan investigation, Hitachi was the largest Japanese exporter of MCIPF to the United States. CR at IV- 7, PR at IV-5. Hitachi ***, and Ward states that it ***. CIPFC Response to Notice of Institution at 9.

Under the statute, a producer of the domestic like product is subject to exclusion from the domestic industry if “a producer of a domestic like product and an exporter or importer of the subject merchandise are related parties, or if a producer of the domestic like product is also an importer of the subject merchandise. . .” 19 U.S.C. 9 1677(4)(B)(i). Hitachi is currently ***. Under the statute a relationship between a producer of the domestic like product and a producer of subject merchandise that does not export the merchandise to the United States does not give rise to a related parties inquiry.

Ward is not subject to exclusion from the domestic industry pursuant to the related parties provision.

23 19 U.S.C. 9 1675a(a). 24 SAA, H.R. Rep. No. 103-316, Vol. I, at 883-84 (1994). The SAA states that “[tlhe likelihood of injury

standard applies regardless of the nature of the Commission’s original determination (material injury, threat of material injury, or material retardation of an industry).” SAA at 883.

While the SAA states that “a separate determination regarding current material injury is not necessary,” it indicates that “the Commission may consider relevant factors such as current and likely continued depressed shipment levels and current and likely continued prices for the domestic like product in the U.S. market in making its determination of the likelihood of continuation or recurrence of material injury if the order is revoked.” SAA at 884.

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26 19 U.S.C. 0 1675a(a)(5).

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but normally will exceed the ‘imminent’ time frame applicable in a threat of injury analysis in antidumping and countervailing duty investigation^."^' 28

antidumping or countervailing duty investigations, it contains some of the same elements. The statute provides that the Commission is to “consider the likely volume, price effect, and impact of imports of the subject merchandise on the industry if the order is revoked.”29. It directs the Commission to take into account its prior injury determination, whether any improvement in the state of the industry is related to the order under review, and whether the industry is vulnerable to material injury if the order is revoked.30 31

Although the standard in five-year reviews is not the same as the standard applied in original

B. Conditions of Competition

In evaluating the likely impact of the subject imports on the domestic industry if an order is revoked, the statute directs the Commission to evaluate all relevant economic factors “within the context of the business cycle and conditions of competition that are distinctive to the affected performing our analysis under the statute, we have taken into account the following conditions of competition in the US. market for MCIPF.

First, the US. market for MCIPF is a mature one. Little, if any, growth in demand is anticipated over the foreseeable fbture due to an increase in the number, types, and features of alternative products available in the marketpla~e.~~ Indeed, apparent U.S. consumption for MCPF during 1997 and 1998 was in the same general range as in the Commission’s original investigations in the mid-1980~.~~

In

. 27 Among the factors that the Commission should consider in this regard are “the fungibility or differentiation within the product in question, the level of substitutability between the imported and domestic products, the channels of distribution used, the methods of contracting (such as spot sales or long-term contracts), and lead times for delivery of goods, as well as other factors that may only manifest themselves in the longer term, such as planned investment and the shifting of production facilities.” SAA at 887.

28 In analyzing what constitutes a reasonably foreseeable time, Commissioner Koplan examines all the current and likely conditions of competition in the relevant industry. He defines “reasonably foreseeable time” as the length of time it is likely to take for the market to adjust to a revocation. In making this assessment, he considers all factors that may accelerate or delay the market adjustment process including any lags in response by foreign producers, importers, consumers, domestic producers, or others due to: lead times; methods of contracting; the need to establish channels of distribution; product differentiation; and any other factors that may only manifest themselves in the longer term. In other words, his analysis seeks to define “reasonably foreseeable time” by reference to current and likely conditions of competition, but also seeks to avoid unwarranted speculation that may occur in predicting events into the more distant future.

29 19 U.S.C. 0 1675a(a)(l). 30 19 U.S.C. 0 1675a(a)(l). The statute further provides that the presence or absence of any factor that the

Commission is required to consider shall not necessarily give decisive guidance with respect to the Commission’s determination. 19 U.S.C. 0 1675a(a)(5). While the Commission must consider all factors, no one factor is necessarily dispositive. SAA at 886.

31 Section 752(a)( 1)(D) of the Act directs the Commission to take into account in five-year reviews involving antidumping proceedings “the findings of the administrative authority regarding duty absorption.” 19 U.S.C. 0 1675a(a)( 1)(D). Commerce has not issued any duty absorption determinations with respect to any of the orders under review.

32 19 U.S.C. 0 1675a(a)(4). 33 CR at 11-12, PR at 11-7; Tr. at 16 (Fish), 20 (Chartrau). 34 Table 1-2, CR at 1-4, PR at 1-3.

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Nevertheless, there have been several changes in the structure of the domestic industry since the time of the original investigations. The domestic industry has undergone substantial consolidation since the time of the original investigations. At the time of the original investigations there were five significant domestic producers. There are currently only two significant domestic producers - Ward and Supply Sales.35 Ward was acquired in 1989 by Hitachi Metals, Ltd., a Japanese producer of MCIPF that was the largest exporter of subject merchandise from Japan during the time of the original Japan in~estigation.~~

for MCIPF. MCIPF sold in the wholesale market are used by firms and individuals that perform residential and commercial construction and maintenance duties.37 These types of users are more likely to require detailed specifications for the MCIPF that they purchase.38 The retail market is currently dominated by firms such as Lowe’s and Home Depot that sell MCIPF principally to firms and individuals that perform occasional repair or replacement work.” Retailers tend to carry a more limited selection of MCIPF than wholesalers and are less likely than wholesalers to monitor the quality of the product they sell!’ Additionally, price appears to be a more important purchasing consideration in the retail market than in the wholesale market.41 The growth of national chains operating very large home improvement stores has resulted in a relatively greater share of MCIPF being sold in the retail market today than at the time of the original

US.-produced MCIPF are sold in the wholesale market. CIPFC estimates that only *** percent of domestic MCIPF production is sold, directly or indirectly, to retailer^.^^

the US. market. Imports from China constitute the bulk of the nonsubject import^!^ In addition, all parties agree that the nonsubject imports from China currently account for a major share of consumption in the retail fna~ket.4~ The volume of nonsubject imports from China has increased substantially since the time of the original investigations. MCIPF imports from China amounted to 10,957 short tons in 1998, as compared to 2 16 short tons in 1985 !6

Finally, there are two different production standards for MCIPF worldwide. MCIPF sold in the United States, Canada, Mexico, and certain parts of South America (excluding Brazil) are manufactured

A second condition of competition is the existence of fairly distinct wholesale and retail markets

Although US. MCIPF producers participate in both markets, the overwhelming proportion of

A third condition of competition is that nonsubject imports now have a substantial presence in

” See CR at 1-16, PR at 1-13. The third domestic producer, Jefferson Union, accounts for *** share of domestic

36 See CR at 1-16, IV-7, PR at 1-13, IV-5. 37 CR at 11-1, PR at 11-1. ’* Tr. at 32,38 (Carey). 39 CR at 11-1, PR at 11-1. 40 CR at 11-2-3, PR at 11-2; Tr. at 38 (Carey), 52 (Carey), 52 (Chartrau), 107 (Colbert). 41 See CR at 11-3, PR at 11-2; Tr. at 51-52 (Chartrau); 107-08 (Colbert). 42 CR at 11-2, PR at 11-2. 43 CIPFC Posthearing Brief, Answers to Commissioners’ Questions at 6. Data submitted by CIPFC indicate that

production. Id.

*** percent of domestic MCIPF production is sold directly to retailers. Staff was able to c o n f m the existence of only one wholesale purchaser of MCIPF that sells into the retail market; this purchaser’s retail sales accounted for less than one-half of one percent of its total sales. CR at 11-3, PR at 11-2. 44 Table 1-2, CR at 1-4, PR at 1-3; CR at 11-3, PR at 11-2. 45 Tr. at 32 (Carey), 80 (Matz), 108 (Colbert). 46 CR at 11-3, PR at 11-2.

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to the National Pipe Thread ("T) standard. MCIPF sold in other parts of the world are manufactured to metric standard^.^'

Based on the record evidence, we find that these conditions of competition in the U.S. market for MCIPF are not likely to change significantly in the reasonably foreseeable future. Accordingly, we find that current conditions in the U.S. market for MCIPF provide a reasonable basis upon which to assess the likely effects of revocation of the antidumping duty orders within the reasonably foreseeable future.

47 CR at 11-9, PR at 11-6.

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SEPARATE VIEWS OF VICE CHAIRMAN MARCIA E. MILLER AND COMMISSIONER JENNIFER A. HILLMAN

In these views, we explain: (1) our decision not to cumulate subject imports of malleable cast iron pipe fittings from Brazil, Japan, Korea, Taiwan, and Thailand; (2) our determination that revocation of the existing orders on such fittings from Brazil, Taiwan, and Thailand would not be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time; and (3) our determination that revocation of the existing orders on such fittings from Japan and Korea would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

I. Cumulation

A. General

Section 752(a) of the Act provides that:

the Commission may cumulatively assess the volume and effect of imports of the subject merchandise from all countries with respect to which reviews under section 1675(b) or (c) of this title were initiated on the same day, if such imports would be likely to compete with each other and with domestic like products in the United States market. The Commission shall not cumulatively assess the volume and effects of imports of the subject merchandise in a case in which it determines that such imports are likely to have no discernible adverse impact on the domestic industry.’

Thus, cumulation is discretionary in five-year reviews. However, we may exercise our discretion to cumulate only if the reviews are initiated on the same day, and we determine that the subject imports are likely to compete with each other and the domestic like product in the U.S. market.

The statute further provides that the Commission “shall not cumulatively assess the volume and effects of imports of the subject merchandise in a case in which it determines that such imports are likely to have no discernible adverse impact on the domestic industry.”2 Under this provision, if the Commission makes a finding that subject imports from a particular country are likely to have no discernible adverse impact, it may not cumulate the volume and effects of imports from that country with the volume and effects of subject imports from other countries.

subject imports in five-year reviews. Our interpretation is supported by the plain meaning of the provision and the legislative history.

The statute uses the term “discernible adverse impact.” In other words, the issue is whether imports will have no “noticeable” or “detectable” adverse impact. Thus, for example, it would be inappropriate to consider whether imports are likely to have a “significant” adverse impact, which is appropriate for the ultimate analysis of whether the domestic industry is likely to be materially injured if the order is re~oked.~

We interpret this provision to be a limited exception to the Commission’s authority to cumulate

’ 19 U.S.C. 0 1675a(a)(7). * 19 U.S.C. 0 1675a(a)(7)(emphasis added).

See, e.g., Stainless Steel Plutefiom Sweden, Inv. No. AA1921-114 (Review), USITC Pub. 3204 (July 1999) at 22 (Commission rendered negative determination, finding that “the subject imports are not likely to have a

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The legislative history to the Uruguay Round Agreements Act (WWA) also indicates the limited scope of this provision. The Senate Report on the URAA clarifies that “it is appropriate to preclude cumulation [in five-year reviews] where imports are likely to be negligible.”4 The legislative history further explains that it is not appropriate “to adopt a strict numerical test for determining negligibility because of the extraordinary difficulty in projecting import volumes into the future with precision” and, therefore, “the ‘no discernible adverse impact’ standard is appropriate in sunset reviews.” Thus, we understand the “no discernible adverse impact” provision to be largely a negligibility provision without the use of a strict numerical test of the sort now required by the statute in original antidumping and countervailing duty investigation^.^

us to focus our analysis on the total volume of imports that would likely occur should an order be revoked, rather than on the change in imports brought about by revocation. This is because the “no discernible adverse impact” provision refers to whether “such imports,” meaning subject imports from a specific country, are likely to have no discernible adverse impact. The statute does not refer to whether any change in the volume or market share of imports caused by revocation is likely to have no discernible adverse impact. The Senate Report to the URAA confirms this interpretation by indicating that cumulation is precluded “where imports are likely to be negligible.”6 Similarly, the URAA Statement of Administrative Action (SAA) and the House Report to the URAA mirror the statute and describe the test as whether “imports” are likely to have no discernible adverse i m p a ~ t . ~ Like the statute, neither the SAA nor the House or Senate Reports in their explanation of this provision refer to the change in imports as a result of revocation.

Given the low “discernible” threshold and the fact that the statute and legislative history refer to the impact of the subject imports, not the change in the level of imports caused by revocation, there will be many instances in which the no discernible adverse impact provision will be inapplicable, such as where imports of a commodity product already have a solid presence in the U.S. market even with the order in place (and are not likely to fall substantially).* Even where the volume of imports is likely to be

Moreover, we interpret the “no discernible adverse impact” provision of the statute as requiring

significant adverse impact on the domestic industry as a whole in the reasonably foreseeable future if the finding is revoked.”).

S. Rep. 103-412, at 51 (1994). 19 U.S.C. 0 1677(24). Indeed, before enactment of the URAA, cumulation was not required in original

AD/CVD investigations if the subject imports were “negligible and have no discernible adverse impact on the domestic industry.” 19 U.S.C. 0 1677(7)(C)(v)( 1994). Because of the similarity of the five-year review provision with the pre-uRAA test for negligibility, the Commission’s prior negligibility practice may provide some guidance in applying the “no discernible adverse impact” provision in five-year reviews. Compare, e.g., Pobethylene Terephthalate Film, Sheet, and Strip fiom Japan, the Republic of Korea, and Taiwan, Inv. Nos. 73 1-TA-458-460 (Preliminary), USITC Pub. 2292 (June 1990) at 20-21 (exception applied where market share of imports from Taiwan was under 0.1 percent and data suggested that sales of those imports were isolated and sporadic, even though the market segment at issue was price sensitive); with Certain Stainless Steel Butt- Weld Pipe Fittingsfiom Korea and Taiwan, Inv. Nos. 731-TA-563-564 (Preliminary), USITC Pub. 2534 (July 1992) at 15-16 (exception not applied where market share of imports from Korea varied between 1 .O and 5.3 percent and the product was continuously marketed throughout the period of investigation).

S. Rep. 103-412, at 51 (1994) (emphasis added). SAA at 887, H.R. Rep. 103-826, Part 1, at 62 (1994).

* See, e.g., Potassium Permanganatefiom China and Spain, Inv. Nos. 731-TA-125-126 (Review), USITC Pub. 3245 (Oct. 1999) at 9-10. In such instances a substantial discussion of the issue in the Commission’s opinion would appear to serve little purpose. In this respect we note that Commission opinions typically omit discussion of the

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low, whether such imports are likely to have no discernible adverse impact on the domestic industry may depend on the particular competitive conditions likely to exist upon revocation of an order. Thus, as appropriate, we consider likely volume and market share of imports and other competitive factors that can affect whether a given volume of imports can have a noticeable adverse impact on the domestic industry, such as the price-sensitive nature of the market, fungibility of the domestic and imported products, or levels of underselling.

In these reviews, given the likely volume of subject imports in the reasonably foreseeable future (as discussed below), we do not find that the subject imports from any of the five countries are likely to have no discernible adverse impact on the domestic industry if the order is revoked. However, for the reasons set forth below, we have not exercised our discretion to cumulate the subject imports from any of the subject countries.

B. Discussion

The Cast Iron Pipe Fittings Committee urged the Commission to cumulate all subject imports. Both the Brazilian and Thai respondents argued that their respective imports should not be cumulated with each other or with other subject imports.

a framework for determining whether the imports compete with each other and with the domestic like product? lo Only a “reasonable overlap” of competition is required.’l In five-year reviews, the relevant inquiry is whether there would likely be competition even if none currently exists. Moreover, because of the prospective nature of five-year reviews, we examine not only the Commission’s traditional competition factors, but also other significant conditions of competition that affect, or are likely to affect, the volume and price of subject imports if the orders under review are revoked. The Commission has considered factors in addition to its traditional competition factors in other contexts where cumulation is discretionary. I2

The Commission has generally considered four factors intended to provide the Commission with

negligibility exception that is applicable to original investigations in cases in which the level of subject imports clearly exceeds the statutory threshold found in 19 U.S.C. 9 1677(24).

other and with the domestic like product are: (1) the degree of fungibility between the imports from different countries and between imports and the domestic like product, including consideration of specific customer requirements and other quality related questions; (2) the presence of sales or offers to sell in the same geographical markets of imports from different countries and the domestic like product; (3) the existence of common or similar channels of distribution for imports from different countries and the domestic like product; and (4) whether the imports are simultaneously present in the market.

The four factors generally considered by the Commission in assessing whether imports compete with each

lo See e.g., Wieland Werke, AG v. United States, 718 F. Supp. 50 (Ct. Int’l Trade 1989). I ’ See Mukand Ltd. v. United States, 937 F. Supp. 910,916 (Ct. Int’l Trade 1996); Wieland Werke, AG, 718 F.

Supp. at 52 (“Completely overlapping markets are not required.”); United States Steel Group v. United States, 873 F. Supp. 673,685 (Ct. Int’l Trade 1994, af’d, 96 F. 3d 1352 (Fed. Cir. 1996)).

See, e.g., Torrington Co. v. United States, 790 F. Supp. 1 161, at 1 172 (Ct. Int’l Trade 1992), aff d without opinion, 991 F. 2d 809 (Fed. Cir. 1993) (affirming Commission’s determination not to cumulate for purposes of threat analysis when pricing and volume trends among subject countries were not uniform and import penetration was extremely low for most of the subject countries); Metallverken Nederland B. V. v. United States, 728 F. Supp. 730,741-42 (Ct. Int’l Trade 1989); Asociacion Colombiana de Exportadores de Flores v. United States, 704 F. Supp. 1068, 1072 (Ct. Int’l Trade 1988).

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In the original investigations, the Commission cumulated subject imports from Brazil, Korea, and Taiwan and, in its subsequent investigations, cumulated subject imports from Japan and Thailand. Despite evidence of quality differences among the subject imports, the Commission found a reasonable overlap of competition among the cumulated subject imports and with the domestic like product. Notably, the Commission found that the channels of distribution for domestic and imported pipe fittings were ~imi1ar.l~

A significant distinction between the market conditions prevailing during the original investigations and today is the development of a more segmented market. At the time of the original investigations, virtually all malleable cast iron pipe fittings were sold through wholesaler^.'^ Today, in contrast, a large and growing volume of sales are made directly to retailers.” This development reflects the expansion of large retail outlets, such as Home Depot. Further, the record indicates that the wholesale market is segmented into primary wholesalers (those selling to large commercial, industrial, and government projects, which account for roughly 80 percent of fittings sold in the wholesale market) and secondary wholesalers (small wholesalers who generally supply residential plumbing contractors). l6 The different market segments generally correspond to differences in the quality of malleable cast iron pipe fittings, with pipe fittings sold in the primary wholesale segment being of higher quality than pipe fittings sold in the secondary wholesale segment or retail segment.”

which have maintained a fairly constant presence in the US. market even after the imposition of the order, are mainly sold to secondary wholesalers and, to a lesser extent, to retailers.’* With respect to Brazil, current import volumes are very small. However, the Brazilian producer provided credible testimony that any sales it makes after revocation would be concentrated in the retail market, which currently is dominated by nonsubject imports from China.19 Imports from Japan, Taiwan, and Korea effectively ceased since the imposition of the orders so it is difficult to assess to what extent any imports from these countries would compete in the same segments as imports from Thailand and Brazil and with the domestic like product. Nevertheless, we note that the significantly higher average unit values of imports from Japan during the original investigation would suggest that imports from Japan would compete more directly with the domestic product in the primary wholesale segment?’

The domestic producers mainly sell to primary wholesalers. In contrast, imports from Thailand,

l 3 Original Brazil/Korea/Taiwan Determination, USITC Pub. 1845 at pp. 8-9. l4 Original BraziUKoredTaiwan Determination, USITC Pub. 1845 at p. A-20; Original Japan Determination,

Is CR at 11-2, PR at 11-2. l6 CR at 11-1, footnote 1, PR at 11-1. Tr. at p. 79. The domestic producers argue that the market is not

USITC Pub. 1987 at A-13-14 (also including information for Thailand).

segmented based on the fact that all malleable cast iron pipe fittings must meet a national standard and because most purchasers did not indicate that the market is segmented. Posthearing brief of CIPFC, p. 2 and section on Answer to the Commissioners’ Questions, p. 10. However, all of the purchasers responding to the Commission questionnaire were customers of the domestic producers, rather than purchasers that buy large quantities of imports. Moreover, the questionnaire response of one of the major wholesalers supports the testimony provided by respondents that imports do not compete in the primary wholesale market. CR at II- 1, PR at II- 1.

CR at 11-2-3, PR at 11-2-3. lS Tr. at pp. 78-80. l9 Tr. at p. 112. *O CR at Table 1-2, PR at Table 1-2. We note that assessing the likelihood of geographical overlap and

simultaneous presence in the U.S. market is difficult because imports from subject countries (other than Thailand) have largely left the U.S. market since imposition of the orders.

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We conclude that the existence of market segments, which indicates that there are differences among subject imports and between imports and the domestic product in terms of channels of distribution and fungibility, calls into question the existence of a reasonable overlap of competition, and strongly weighs against exercising our discretion to cumulate subject imports in these reviews. Moreover, other conditions of competition also weigh against a cumulated analysis. As discussed below, the industry in Taiwan has largely ceased operations, whereas the industry in Japan does not appear to have changed since the original investigations and remains much larger than the industries in the other subject countries. The industry in Thailand has fairly substantial excess capacity, whereas the industry in Brazil has much less excess capacity.2’

are likely to compete in different market segments, and other differences in the conditions of competition among the subject countries, we have determined not to exercise our discretion to cumulate subject imports in these reviews.

In sum, given the now more segmented structure of the market and the fact that subject imports

11. Likelihood of Material Injury Analysis

A. Statutory Criteria

The statute directs the Commission to “consider the likely volume, price effect, and impact of imports of the subject merchandise on the industry if the order is revoked.”22 It directs the Commission to take into account its prior injury determination, whether any improvement in the state of the industry is related to the order under review, and whether the industry is vulnerable to material injury if the order is revoked.23

In evaluating the likely volume of imports of subject merchandise if the orders under review are revoked, the statute directs the Commission to consider whether the likely volume of imports would be significant either in absolute terms or relative to production or consumption in the United States.24 In doing so, the Commission must consider “all relevant economic factors,” including four enumerated factors: (1) any likely increase in production capacity or existing unused production capacity in the exporting country; (2) existing inventories of the subject merchandise, or likely increases in inventories; (3) the existence of barriers to the importation of the subject merchandise into countries other than the United States; and (4) the potential for product shifting if production facilities in the foreign country, which can be used to produce the subject merchandise, are currently being used to produce other pr0ducts.2~

is directed to consider whether there is likely to be significant underselling by the subject imports as compared with the domestic like product and whether the subject imports are likely to enter the United

In evaluating the likely price effects of subject imports if the orders are revoked, the Commission

” Compare CR at Table IV-3 with CR at Table IV-4. ’’ 19 U.S.C. 8 1675a(a)(l). 23 19 U.S.C. 8 1675a(a)(l). The statute further provides that the presence or absence of any factor that the

Commission is required to consider shall not necessarily give decisive guidance with respect to the Commission’s determination. 19 U.S.C. Q 1675a(a)(5). While the Commission must consider all factors, no one factor is necessarily dispositive. SAA at 886.

24 19 U.S.C. 9 1675a(a)(2). ’’ 19 U.S.C. Q 1675a(a)(2)(A)-(D).

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States at prices that would have a significant depressing or suppressing effect on the prices of the domestic like product.26

Commission is directed to consider all relevant economic factors that are likely to have a bearing on the state of the industry in the United States, including but not limited to: (1) likely declines in output, sales, market share, profits, productivity, return on investments, and utilization of capacity; (2) likely negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital, and investment; and (3) likely negative effects on the existing development and production efforts of the industry, including efforts to develop a derivative or more advanced version of the domestic like product?’ All relevant economic factors are to be considered within the context of the business cycle and the conditions of competition that are distinctive to the industry.28 As instructed by the statute, we have considered the extent to which any improvement in the state of the domestic industry is related to the antidumping duty orders at issue and whether the industry is vulnerable to material injury if the order are revoked.

In evaluating the likely impact of imports of subject merchandise if the orders are revoked, the

B. Brazil

We determine that revocation of the antidumping duty order on malleable cast iron pipe fittings from Brazil is not likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

Brazil increased from 698 tons in 1983 to 1,637 tons in 1984, and then decreased to 238 tons in 1985.29 The ratio of these imports to apparent domestic consumption remained near or less than *** percent during all years, and was lower in 1985-86 than in 1983-84.30 Commission data showed underselling throughout the period of investigation. Purchasers also indicated that the domestic industry had lost sales because of lower priced subject imports. Finally, in concluding that the domestic industry producing malleable cast iron pipe fittings was materially injured by reason of cumulated subject imports from Brazil, Korea, and Taiwan, the Commission found that the increasing volumes of low-priced

In the original determination concerning Brazil, the Commission found that subject imports from

26 19 U.S.C. 9 1675a(a)(3). The SAA states that “[c]onsistent with its practice in investigations, in considering the likely price effects of imports in the event of revocation and termination, the Commission may rely on circumstantial, as well as direct, evidence of the adverse effects of unfairly traded imports on domestic prices.” SAA at 886.

27 19 U.S.C. 0 1675a(a)(4). 28 19 U.S.C. 0 1675a(a)(4). Section 752(a)(6) of the Act states that “the Commission may consider the

magnitude of the margin of dumping” in making its determination in a five-year review. 19 U.S.C. 0 1675a(a)(6). The statute defines the “magnitude of the margin of dumping” to be used by the Commission in five-year reviews as “the dumping margin or margins determined by the administering authority under section 1675a(c)(3) of this title.” 19 U.S.C. 0 1677(35)(C)(iv). In its final five-year review determinations concerning malleable cast iron pipe fittings, Commerce determined that revocation of the antidumping duty orders would be likely to lead to continuation or recurrence of dumping margins of the following magnitudes: for Brazil, 5.64 percent; for Japan, 57.39 percent; for Korea, 12.48 percent; for Taiwan, from 7.93 to 80.0 percent; and for Thailand, 1.7 percent. CR at 1-10, PR at 1-8.

29 Original Brazil/Korea/Taiwan Determination, USITC Pub. 1845 at A-29. In the original investigation, the Commission assessed imports from Brazil on a cumulated basis with Korea and Taiwan. Collective imports from Korea and Taiwan rose from 5,149 short tons in 1983 to *** short tons in 1985.

30 Original Brazil/Korea/Taiwan Determination, USITC Pub. 1845 at A-32.

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subject imports led to declines in the domestic industry’s financial performance, employment, and market hare.^'

entering in 1998. Prior to the order, subject imports never accounted for more than *** percent of apparent domestic consumption, and were generally below *** percent. Currently, other subject and nonsubject imports account for just over *** percent of the domestic market.

intent to increase only “moderately” its shipments to the U.S. market if the order is record supports Tupy’s contention that imports from Brazil will not increase to significant levels if the order is revoked. Tupy reports little excess capacity in Brazil, with utilization rates near *** percent.33 Further, current production is concentrated in metic standard pipe fittings, which are not shipped to the United States. Recognizing the ability of Tupy to manufacture U.S. standards fittings (referred to as NPT) and its stated intent to configure some unused capacity to production for the U.S. we note that the concentration in metic standards nevertheless limits the likelihood of the diversion of a large quantity of current production to the U.S. market.35 Also, Tupy testified that in order to compete with the domestic product at the wholesale level, it would have to supply a fuller range of products than it currently manufactures in the NPT standard, and establish a complete distribution system.36 Moreover malleable cast iron pipe fittings are only one of a number of different cast products manufactured by Tupy, and are not the primary focus of the company’s operation^.^^ Thus, we do not find the ability to shift certain production steps between malleable cast iron pipe fittings and other cast products to be an indication of likely significant increases in export levels to the U.S. market.

the company reports that it expects to concentrate initially in the retail market.38 Thus, it is likely that any increase in imports from Brazil would compete first with other imports, primarily Chinese, in the retail market, rather than with the domestic pr0duct.3~

Because of the limited level of subject imports from Brazil, we were unable to obtain current pricing for these subject imports.4o Nevertheless, because we have found that import volumes are likely to be small and that competition from such imports is likely to be against other subject and nonsubject imports in the retail segment of the market, we find that the Brazilian product is unlikely to enter the United States at prices that would have a significant depressing or suppressing effect on prices for the domestic like product. Even if subject imports were to enter the wholesale segment of the market, it is likely that any competition largely would be with imports from Thailand in the secondary segment of the

Under the antidumping duty order, subject imports from Brazil remained low, with only 2 tons

Tupy is the sole Brazilian producer and exporter of the subject pipe fittings and has indicated its The

Finally, while Tupy expects to increase shipments to the U.S. market in the event of revocation,

31 Id. at 5-7, 11-12. 32 Prehearing brief of Tupy, p. 16. 33 Table IV-3, CR at IV-6. 34 Posthearing Brief of Tupy, Attachment 2, p. 2. 35 CR at 11-8, PR at 11-5. 36 Tr. at pp. 102 and 1 1 1 . 37 Tupy notes that auto castings comprise the largest portion of its overall production. Tr. at p. 102; See CR at

38 Prehearing brief of Tupy, p. 16; Tr. at p. 112. 39 Prehearing brief of Tupy, p. 16 and Posthearing Brief of Tupy, p. 11, noting that the related party to Tupy’s

40 The shipment reported by an importer was considered a trial import, and the products were priced *** both

IV-5.

U.S. customer sells exclusively to the retail segment. Also Tr. at 121-22 (Werner).

the domestic and Thai fittings. The importer reported that ***. CR at V-7, PR at V-5.

17

wholesale market. Such imports from Thailand have undersold the U.S. product throughout the period for which data were collected and, as discussed below, have not had any significant depressing or suppressing effect on domestic pri~es.~’

We have considered whether the domestic industry is vulnerable to material injury if the order is Based on the recent overall financial performance of the domestic industry, despite some

downturns in certain operating and financial indicators, we do not consider the industry to be vulnerable.43 The industry has undergone consolidation since the original investigations, and now consists of two domestic producers, Supply Sales and Ward. The industry reported *** financial results in both 1997 and 1998. Although production and net sales quantities were somewhat lower in 1998 than 1997, prices and unit values were higher, resulting in an overall *** performance.44 The *** condition of the domestic industry supports the conclusion that the industry is not likely to be materially injured if the order is rev0ked.4~

volumes of imports from Brazil or to significant price effects, and therefore, that subject imports are not likely to have a significant adverse impact on the domestic industry’s output, sales, market share, profits or return on investments. We therefore find that revocation of the antidumping duty order on Brazil is not likely to lead to continuation or recurrence of material injury to the U.S. malleable cast iron pipe fittings industry within a reasonably foreseeable time.

We find that revocation of the antidumping duty order is not likely to lead either to significant

C. Taiwan

We determine that revocation of the antidumping duty order on malleable cast iron pipe fittings from Taiwan is not likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

In the original determination concerning Taiwan, the Commission found that subject imports increased from 3,709 tons in 1983 to 5,516 tons in 1985. The imports accounted for a share of domestic consumption that increased from *** percent to *** percent over the investigation period.* In its analysis of cumulated subject imports from Brazil, Korea, and Taiwan, the Commission found persistent underselling by the subject imports.4’ The Commission found that the increasing volumes of low-priced,

4’ See, CR at Tables V- 1 -V-4, PR at Tables V- 1 -V-4. 42 See SAA at 885 (“The term ‘vulnerable’ relates to susceptibility to material injury by reason of dumped or

subsidized imports. This concept is derived from existing standards for material injury and threat of material injury. . . . If the Commission finds that the industry is in a weakened state, it should consider whether the industry will deteriorate further on revocation of an order . . . ”). In its submissions, CIPFC asserts that an industry in a strong financial condition can nevertheless be vulnerable in light of conditions of competition, such as when there is a mature market for a price-sensitive product. CIPFC Posthearing Brief at 9-10; Answers to Commissioners’ Questions at 7-8. We disagree with CIPFC’s interpretation of the vulnerability criterion.

43 Staff Report at Table C- 1. 44 CR at Table 111-5, and Tables V-1-V-5, PR at Table 111-5, and Tables V-1-V-5. 45 We note that the domestic industry has achieved this *** performance notwithstanding the presence of a

substantial quantity of imports (primarily from China and Thailand), which account for about *** percent of the domestic market.

46 Original Brazil/Korea/Taiwan Determination, USITC Pub. 1845 at A-29, A-32. 4’ Original Brazil/Korea/Taiwan Determination, USITC Pub. 1845 at A-37-38.

18

cumulated subject imports led to declines in the domestic industry’s financial performance, employment, and market share, and concluded that the domestic industry was materially

less than a *** percent market share. During the original investigation, there were reportedly 25 companies producing subject pipe fittings in Taiwan, five of which provided data to the C0mmission.4~ Reported production capacity at that time was *** tons.50 Since the original investigation, the industry in Taiwan has largely ceased operations. An industry expert with substantial familiarity with the Taiwan industry testified that only one company still produces subject pipe fittings in Taiwan and its production is ***.51 The other companies have either shut down or moved their operations offshore.52 Further, while the record suggests that the Taiwan industry exports small amounts of malleable cast iron pipe fittings to the EU,53 Taiwan was not among the countries named in the recently filed antidumping complaint in the EU, which may suggest that imports from Taiwan in the EU are not ~ignificant.~~ Finally, the domestic industry only identified a single producer remaining in Taiwan.55

that the likely import levels from Taiwan are likely to be too small to have significant effects on the domestic price of malleable cast iron pipe fittings.

Given the apparent exit from the Taiwan industry of virtually all producers since the Commission’s original determination, we conclude that the volume of subject imports from Taiwan is not likely to reach significant levels within a reasonably foreseeable time if the antidumping duty order is revoked. We also do not find that imports from Taiwan are likely to enter at prices that would have a significant depressing or suppressing effect on domestic prices. Thus, we find little likelihood of a significant adverse impact on the domestic industry’s output, sales, market share, profits or return on investment^.^^ We therefore find that revocation of the antidumping duty order against Taiwan is not likely to lead to continuation or recurrence of material injury to the U.S. malleable cast iron pipe fittings industry within a reasonably foreseeable time.

Since the original determination, subject imports from Taiwan have remained low, averaging

Even though we were unable to obtain current pricing data for pipe fittings from Taiwan we find

D. Thailand

We determine that revocation of the antidumping duty order on malleable cast iron pipe fittings from Thailand is not likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

48 Original BrazilUKoredTaiwan Determination, USITC Pub. 1845 at 5-7. 49 Original Brazil/Korea/Taiwan Determination, USITC Pub 1845 at A-10. ” Original Brazil/Korea/Taiwan Determination, Conf. Report at A- 18. ” CR at IV-9. See also Posthearing brief of Tupy, Appendix 4. ” Tr. at p. 133. ’’ Posthearing brief of the Cast Iron Pipe Fittings Committee, p. 7. ” This conclusion is supported by information submitted by the domestic producers, which shows that the

volume of imports into the EU from Taiwan is small in comparison to import volumes from the countries subject to the EU investigation. Posthearing brief of the Cast Iron Pipe Fittings Committee, Exhibit 2.

’’ Id. ’‘ As discussed above, we have concluded that the domestic malleable cast iron pipe fitting industry is not

currently in a vulnerable condition. This factor supports the conclusion that the domestic industry is not likely to be materially injured if the order is revoked.

19

In the Commission’s original determination for Thailand, the Commission found that the volume of cumulated imports from Japan and Thailand remained at high levels during a period of declining apparent consumption and that market penetration of these imports increa~ed.~~ The quantity of subject imports from Thailand increased from 1,266 tons in 1984 to 4,63 1 tons in 1986, and was 1,633 tons in interim (January-March) 1987 as compared to 841 tons in interim 1986. Market penetration of subject imports from Thailand increased from 1.8 percent in 1984 to 7.6 percent in 1986 and was also higher in interim 1987 (10.8 percent) than interim 1986 (5.2 percent).s8 In that determination, the Commission found that the subject imports from Thailand undersold the domestic like product in every comparis~n.~~

Unlike the other subject countries, subject imports from Thailand did not fall following issuance of the order; rather, their presence in the U.S. market is now larger in absolute volume and as a share of apparent consumption than during the original investigation period.6O However, import volumes have declined since 1997. The quantity of subject imports from Thailand was 8,144 tons in 1997 and 7,011 tons in 1998. Market penetration, measured by quantity, was *** percent in 1997, *** percent in 1998, *** percent in interim 1998, and *** percent in interim 1999.‘’ The antidumping duty margin imposed on subject imports from Thailand has been 1.7 percent since the order was issued.‘*

Thai production capacity has remained constant since 1997, and Thai producers *** should the antidumping duty order be rev0ked.6~ Additionally, the Thai producers have indicated that ***.@

The Thai industry’s unused production capacity, and capacity utilization, in interim 1999 was lower than in the previous period^.'^ While inventories of Thai fittings are maintained both in the United States and Thailand, not all such inventories in Thailand are of types sold in the U.S. market.66

Notwithstanding the existence of some unused capacity and inventories, we do not believe that subject import volume of subject pipe fittings from Thailand would likely increase significantly should the antidumping duty order be revoked. As previously discussed, the market for malleable cast iron pipe fittings is divided into distinct retail and wholesale segments, and the wholesale market is further segmented into primary and secondary tiers. Thai respondents argued that while they participate in the wholesale segment, it is at the secondary level, and not in direct competition with domestic merchandise. One of the largest domestic wholesalers of pipe fittings noted that “imported malleable is hardly showing up in the section of the market we’re dealing with,” and that what is available is sold separately from the domestic prod~cts.~’ Although the Thai industry is export-oriented, Thai producers have stated that their long-term export strategy is one of ***!8 Indeed, Thai producers export to North America, Europe,

57 Original Thailand Determination, USITC Pub. 2004 at 11; Original Japan Determination, USITC Pub. 1987

58 Original Thailand Determination, USITC Pub. 2004 at A-35. 59 Original Thailand Determination, USITC Pub. 2004 at A-38-41.

CR at Table 1-2, PR at Table 1-2. “ CR at Table 1-2, PR at Table 1-2.

CR at Table 1-2, PR at Table 1-2. 63 CR at Table IV-4, CR at IV-9, PR at IV-6; CR at IV-10, PR at IV-6; CR at 11-9, PR at 11-6. 64 CR at 11-12, PR at 11-7. 65 Capacity utilization declined from *** percent in 1997 to *** percent in 1998, and was *** percent in

66 Table IV-2, CR at IV-4, PR at IV-4; Table IV-4, CR at IV-9, PR at IV-6; CR at 11-1 1, PR at 11-7. ” CR at 11-1, PR at 11-1. ‘* CR at 11-10, PR at 11-6.

at 10-11.

interim 1999, as compared to *** percent in interim 1998. Table IV-4, CR at IV-9, PR at IV-6.

20

Asia, and Australia, and producers have longstanding relationships with the suppliers in these countries.69 Based on these facts, we do not believe that revocation of the antidumping duty order is likely to cause Thai producers to increase significantly their presence in the U.S. market.

imports from Thailand. The subject imports from Thailand undersold the domestic like product in all possible quarterly comparison^.^^ We believe that the subject imports from Thailand will continue to undersell domestic fittings if the antidumping duty order is revoked. We note, however, that these imports do not currently have significant adverse effects on prices for the domestic product, and there is no evidence in the record to suggest that this will change. Over the course of the period of review - January 1997 through June 1999 -- prices for the subject imports from Thailand declined for each of the four products for which data were collected. In contrast, prices for the domestic fittings rose for each of the products.71 The lack of correlation of prices between domestic and imported Thai pipe fittings appears to reflect the different market segments in which these products are sold.

Consequently, at current volumes, we find no causal relationship between the price of the subject imports from Thailand and the price of the domestic like product. In light of our prior finding that, if the antidumping duty order is revoked, subject import volume from Thailand is not likely to change significantly, we conclude that this lack of a causal relationship between prices for Thai and domestically-produced pipe fittings will persist.

As discussed in the previous section on Brazil, we do not find that the domestic industry is in a weakened state, as contemplated by the vulnerability criterion of the statute. We also conclude that the subject imports from Thailand are not likely to have an adverse impact on the domestic malleable cast iron pipe fitting industry within a reasonably foreseeable time if the antidumping duty order is revoked. We have found that revocation of the antidumping duty order is not likely to lead either to significant additional volumes of subject imports from Thailand or to significant price effects. Instead, these imports are likely to continue their current presence in the market, under which the domestic industry is able to maintain or increase prices, notwithstanding underselling by the subject imports, and to pr

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Malleable Cast Iron Pipe Fittings from Brazil, Japan, Korea, … · 2014-05-27 · Awaji Sangyo...

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